Fortunately, the IRS is bending over backwards to make sure these get delivered. They’ve publicized the issue (though 383,000 wrong addresses out of over 100 million tax filers doesn’t call for much of a mea culpa), and they’ve whipped up some useful tools for curious taxpayers:

According to a new study, yes: people earning $500,000 to $1 million understate their income by about 21%, compared to 8% for those earning $50,000 to $100,000. The first obvious response is outrage — how dare they lie, when they’re already so much better off? But a more practical question is to ask what we can do about this — and whether we should do anything at all.

To deal with tax evasion, you have to think like a tax evader. The first thing to do is to restate your term: the marginal tax rate isn’t a tax rate — it’s the return on dishonesty. Someone taxed at 15% gets fifteen cents for every dollar worth of lies;… Read more…

What’s surprising is that for someone earning so much — his last salary was $178,000 per year — and working directly for the state government, O’Byrne didn’t get much attention from the tax authorities. From 2001 to 2005, he accumulated a six-figure debt without ever being asked to pay up.

According to his lawyer, Richard Kestenbaum, he suffered from ‘Non-Filer Syndrome’, which made him too depressed to do his taxes, even though, “Most times, with professionals, these are very high-functioning people… Read more…

With the market in the doldrums and the election turning nastier every day, most people are feeling increasingly negative about everything, their finances included. But the markets have (for now) stopped crashing, and some people are taking stock and seeing reasons to be optimistic. Meanwhile, others point out that there are still some financial follies to avoid. And, of course, there’s a new crop of entertaining tax evaders since the last edition of Today in the Taxosphere.

Joe Wurzelbacher might think twice about getting involved in politics again. A week ago, Joe the Plumber was just another plumber. Now he is the Joe the Plumber, a more important political topic than the War in Iraq, and a more sensitive debate subject than abortion or gay marriage.

How did Joe the Plumber find his way into the spotlight? First, he happened to be named ‘Joe’: every candidate wants a less insulting, more family-friendly replacement for “Joe Sixpack,” and Joe the Plumber is definitely it. But more importantly, he touched on a crucial issue: what are the long-term effects of the Obama and McCain tax plans?

$700 billion. It’s an incredible number. The Troubled Asset Relief program (abbreviated TARP, often just called “The Bailout”) is an unprecedented spending spree. The closest comparison, the Marshall Plan, cost about $110 billion in present dollars, so the scope of the TARP is beyond that of any new government program.

When people hear about $700 billion in new spending, their first reaction after scraping their jaw off the floor is to ask: “Who will pay for this?” with the sneaking suspicion that the answer is, as usual, “The taxpayers.”

But it’s not that simple. The first important thing to realize about paying for the bailout is that it’s not necessarily going to mean a higher tax rate or an end… Read more…

It’s hard to miss the headlines about hedge fund collapses. It seems like every day there’s a story of another hedge fund that blew up thanks to esoteric bets on mortgages, metals, or currencies. One easy lesson to draw from this is that the hedge fund concept has been thoroughly debunked. But a better lesson is to ask how you can behave more like a smart hedge fund owner.

I don’t mean to suggest that any small investor should play with the financial high-wire act that some funds use. Nor should typical investors play around with complex securities like stock options — if a team of MIT-educated PhDs could lose billions of dollars on ‘risk-free’ options trading, it… Read more…

Is it true that there’s no law saying I have to pay income taxes? This is a common question on tax forums and discussion boards. Many websites and publications argue that paying taxes is illegal, immoral, unconstitutional, dishonest — basically every synonym for evil except “fattening”. The famous tax protestor Irwin Schiff calls income taxes “The Biggest Con.” The rise of popular libertarian candidates like Ron Paul has caused many people to scrutinize the Constitution and reconsider current tax rates.

So what’s the big deal? Is it true that we don’t owe taxes? Can we do anything about it?

There are several common conversational gambits among tax protestors, but the most common is: “What law, specifically, requires us to pay

We’re all bracing for the next debate, but the taxosphere is rolling right along. Today brought in still more outraged comments about the bailout/stabilization plan/boondoggle-upon-a-boondoggle-upon-a-boondoggle. There’s a lot to catch up on in today’s tax blog posts: